5 mistakes distributors make when selecting an …...5 mistakes distributors make when selecting an...

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5 Mistakes Distributors MakeWhen Selecting an EnterpriseSoftware Solution

5 Mistakes Distributors Make When Selecting an Enterprise Software Solution

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Table of ContentsSystem Replacement Starts with a Vision ..................................................3

Mistake #1 ................................................................................................4

Not involving the head of the organization in the decision-making process

Mistake #2 ................................................................................................5

Skipping the planning phase because “it takes too much time”

Mistake #3 ................................................................................................7

Considering a technology provider that doesn’t truly understand your industry

Mistake #4 ................................................................................................8

Assuming you will do things exactly the same way you do them today

Mistake #5 ................................................................................................9

Selecting a vendor that lacks a long-term vision

Replacement Expertise Delivers True Return on Investment ....................10


System Replacement Starts with a VisionIt’s no light matter to replace your enterprise software system. It’s essentially performing a heart

transplant on your business. Replacement may appear to be a difficult and painful process, but

done right, it can open numerous business opportunities. The cornerstone of this effort is finding

the partner that can show you how to make this hard transition easier, and a specialist with the

confidence to walk side-by-side with you until your goals are achieved.

Distributors decide to replace their enterprise resource planning (ERP) systems for a variety of

reasons. At the most fundamental level, the question is whether your current system supports or

constrains your ability to execute business strategies that will make your company successful and

establish it as an industry leader.

After the decision to change is made, you must imagine what your company will look like in 10

years or more. What new developments in your industry will reshape your company? How will

your company lead or respond to those changes? More importantly, how will you get there, what

technologies will you have adopted, and how will they have helped you succeed? This vision will

form the basis of the criteria for your selection of an ERP system replacement.

Your enterprise software provider must be part of your vision. They must have faced these

challenges many times in their history and learned how to help distributors adopt new

technologies. The future of your business depends on whether they have successfully made

the leap from one technology curve to the next, and continue to innovate and deliver to help

companies like yours lead the change.

Selecting the right software provider for your business can be a daunting task for those who lack

experience in this process. The last thing any person or company wants is to invest in the wrong

technology and choose the wrong partnership.

There are five common mistakes distributors make when embarking on the software

selection process.

XX Not involving the head of the organization in the decision-making process

XX Skipping the planning phase because “it takes too much time”

XX Considering a technology provider that doesn’t truly understand your industry

XX Assuming you will do things exactly the same way you do them today

XX Selecting a vendor that lacks a long-term vision

If you can avoid these common pitfalls, you will dramatically increase your chances for success.

This document addresses each of these issues and presents sound advice for ensuring you make

the proper decision that will support and enhance the future vision of your company.

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Mistake #1Not involving the head of the organization in the decision-making processYou wouldn’t open a new warehouse or branch location without involving your business leaders,

so why do a significant number of distributors exclude their owner, president, or CEO from the

enterprise software decision-making process? In today’s technology-driven world, perhaps no

other decision can have a greater impact on your company’s success or failure. However, thinking

it’s strictly a technology issue, top executives often leave the decision solely to their information

technology (IT) staff. In reality, purchasing software is a pure business decision. Unless the IT team

understands the vision of the company for the next 5-10 years, they cannot judge the value a

software solution will bring to the business. The top executive should always lead the search for

new software by establishing a vision for the project.

Because the software selected will impact almost every employee within the organization, the

success or failure of the new software often hinges on whether or not the people who will

use it buy into the decision. Line managers in each operational area must have some input

in the decision-making process. That is not to say that theirs is the only vote that counts, but

understanding their day-to-day issues will help you make an informed decision.

Finally, input from the IT staff is necessary to ensure that the software solution you select can carry

your business into the future. Software that meets your needs today can become obsolete in six

months if the technology that the software is built upon can’t grow and adapt with

your business.

Ideally, the team selecting your new enterprise software solution should include a high-level

executive sponsor with long-range vision; line managers from each discipline to confirm proper

functionality; and IT staff to ensure that you have the best technology infrastructure for the

present and future.

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Mistake #2Skipping the planning phase because “it takes too much time”The time you invest in planning your vendor selection process will easily pay off before the process

is complete. Not documenting your objectives and timelines will certainly result in delay—or

possibly derailment—of the project.

The most important first step any business needs to take is to define your compelling event.

This is your definitive answer to the question, “Why now?” Distributors have many reasons to

consider supplanting their existing ERP system, whether it’s replacing outdated technology that

creates pain points for their staff, improving their ability to service their customers, or taking

advantage of functionality that can streamline processes and dramatically improve profitability.

Compelling events are often tied to a process mandate from a key business partner, or an

organizational change such as a merger or acquisition.

Without a compelling event that clearly outweighs the other reasons to remain on their current

ERP system, distributors often invest considerable time and effort in an evaluation process, only

to decide to maintain the status quo. You must define your compelling event early enough so

you can balance it against the forces of inertia and any unanticipated concerns that arise.

Document this for everyone to read and understand. This is your guiding force throughout the

evaluation process.

Once you have identified your compelling event, the cornerstones of your evaluation process

should be: identifying your critical business issues and needs, and defining the selection criteria

for the right software and technology provider. With those pieces in place, you will have the

proper framework in which to decide.

XX Determine your budget and ability to afford the investment. If the initial investment

amount is a concern, the software provider may have a Software as a Service (SaaS)

solution that allows you to essentially “rent” access to the software in the cloud,

decreasing your need for up-front cash.

XX Assign the selection team. Be sure to identify the executive sponsor and all critical

stakeholders.

XX Identify areas of your business you want to improve, and list your staff’s critical

business issues. Also note areas in which you already do well, so the solution provider

can address your most important needs. This doesn’t need to be a 200-page document

with 10,000 requirements, only a checklist to keep your team focused on solving the

problems that are important to you.

XX Define selection criteria (request for proposal, or RFP) for the solution and the

provider partnership. Criteria such as long-term financial stability, in-depth knowledge

of your industry, investment in research and development, implementation process, and

technology vision are all important factors to consider.

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Also, be sure to develop a timeframe and stick to it. It’s human nature to procrastinate, and the

process of switching software is not fun. Prepare yourself by documenting all of the evaluation

activities you intend to complete (discovery sessions, demos, site visits, etc.), and set tentative

dates for completion of each. If milestones are not set on the front end, you run the risk of

delaying the decision and costing your business significant time and money. Whether you’re

a $100M+ multi-branch business or a 10-employee, single-location distributor, there is a basic

sequence for selecting a technology partner that every company should follow:

1. Send the RFP to potential solution providers. Allow two weeks to get responses back

before narrowing your search to the top 3-4 companies, based on RFP responses.

2. Hold a meeting to review business objectives with the solution providers. Discuss

the selection process and criteria and agree to the sequence of evaluation events. Also

be sure to request a copy of the contract they will ask you to sign. Make sure there are

not any major legal or business roadblocks now, before you invest too much time with a

particular software vendor.

3. Complete a credit application and deliver to the solution providers. It’s best to

address this step early in the process.

4. Hold a meeting to review business processes and conduct a demo with the

solution providers. Review each solution provider’s return on investment (ROI) analysis

and confirm that all of your requirements have been met.

5. Narrow your search to the final two solution providers.

6. Conduct reference calls and visit the solution providers’ reference customers. Be

sure these distributors are similar to your company in regards to industry and purpose—

but you’ll want to see distributors that represent what you aspire to be in a few years, not

what you are now. The most important question to ask of a reference is: If you could do it

all over again, what would you do differently?

7. Confirm that each solution provider meets the partnership selection criteria. If

you can, visit the solution providers’ corporate office. This will give you the opportunity to

see their operations in action and meet the leadership of the organization.

8. Consider and address all risks before proceeding. Make sure you are comfortable

with your plan for mitigating any perceived financial, operational, or talent risks.

9. Decide on the final solution provider and execute partnership agreements. Be

sure to review the solution provider’s license and service agreements with legal advisors.

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Mistake #3Considering a technology provider that doesn’t truly understand your industryYou can’t fit a square peg into a round hole. Likewise, you can’t achieve maximum profitability

running a generic ERP or accounting software package in the distribution world. You need a

solution provider who understands the nuances of your business and has the functionality to

support your unique needs.

Answers to the following questions will help you narrow your field of vendors a bit:

XX How many customers are distributors?

What is the exact number? Distribution is very different from other businesses.

You don’t want to have to teach a software vendor how the distribution industry works.

Be sure to ask how many distributors—not general businesses—the company has

implemented over the years.

XX How long has the company been serving distributors?

Longevity in a technology provider can indicate whether the company has the proper

experience and will be around in the future to support your business.

XX Who are the people who will implement your software system?

Remember, you’re not only investing in software, you’re also investing in people. The

#1 weakest link in IT implementations is typically reported to be consulting expertise, so

make sure a vendor’s staff of design professionals, systems analysts, financial experts, and

application, technical, and distribution consultants all understand distribution inside and

out. They should be able to recommend strategies and processes for achieving best-in-

class performance while demonstrating proven ability to complete implementations on

time and on budget.

XX Is there an annual users conference focused on the needs of distributors?

You will benefit tremendously from being able to network with your business peers and

share best practices for profitability. Be sure the software vendor provides a forum for

continuing education and networking with a significant user base of companies like

yours. Also inquire if their customer base has any independent user groups, and the

number of distributors in those groups.

XX Is the company a member of associations and buying/marketing groups in

your industry?

Does the solution provider attend or speak at tradeshows, annual meetings, and

other events in your industry? Do they work closely with advisory groups to develop

functionality that meets your industry needs?

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Mistake #4Assuming you will do things exactly the same way you do them todayThere is no better time to re-evaluate your business processes than when you are about to select

and implement a new business system. Too many distributors fail to recognize the true value of

the software they evaluate because they get stuck on one particular response: “Because that’s the

way we’ve always done it.”

Granted, you need a distribution software solution that conforms to your business and not

the other way around. However, many distributors overlook the fact that today’s technology and

industry best practices can allow them to do things more profitably and in ways they

never imagined.

According to a study performed by Cisco Systems, “Companies that changed their business

processes at the same time they implemented new technology saw a 25-30 percent increase in

productivity. Without changing their business processes to fit the new technology, businesses

actually lost productivity at a rate of 6-9 percent.”

The best solution providers adhere to lean methodology when it comes to distribution

functionality and processes. Lean process re-engineering can minimize or eliminate waste in your

business—those steps in a daily process that add zero value to the customer and take entirely too

much of your time and effort, while resulting in a significant number of costly errors. Be sure to

inquire with the solution provider if they have staff certified in lean methodology. You want to

use this opportunity to architect new processes that will immediately impact your profitability and

customer service levels.

For those business processes that are truly unique to your company, your new technology should

be modifiable to handle exceptions. To clarify, the system must be fully adaptable to your needs

without invasive changes to any elements of the application code. Changing the application code

practically guarantees costly problems down the road.

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Mistake #5Selecting a vendor that lacks a long-term visionTo understand what the next 10 years will bring for distribution, and what impact it will have,

look at the last 10 years and then double that rate of change. Technology will provide information

to the knowledge worker at any time on any device. This information will be personalized and will

anticipate the needs and activities of every organizational role, helping employees make decisions

on exceptions and automating routine daily processes. An enterprise software system will have to

adapt to new business and technology strategies that few of us can accurately predict today.

You need to be sure that your company’s distribution software solution will be able to grow with

the organization and adapt to changes in the business, as well as continue to offer the best in

ERP functionality as the technology continues to evolve.

Questions you can ask to ensure the solution provider has a strategic vision for distribution

technology include:

XX What does their technology roadmap look like for your product?

What percentage of development is for new innovation versus bug fixes or incremental

improvements? Do they release new versions of the software every other year, every year,

every six months, or every quarter? Use their previous two years’ track record as proof

XX What is their vision for business mobility?

Are you able to access business information in environments outside of a monolithic ERP?

Do they have business applications that run on mobile devices?

XX How malleable is the software to your users’ specific needs?

Extensibility is a critical term when it comes to distribution software. Your solution

should allow you to modify the look of screens and fields, create new business logic in

the system without affecting the source code, and create user-specific portals into the

information that each employee needs to perform their job as efficiently as possible

XX Do they have a vision for moving applications to the cloud?

Cloud computing (the delivery of computing as a service over the Internet) continues to

grow exponentially because of its ability to keep costs low and provide anywhere, anytime

access to your business system. A solution provider that lacks a firm understanding of the

power of the cloud and a vision for taking their products there will not be a competitive

player in years to come

Evidence of dedication to providing strategic, enterprise-wide, mission-critical applications to

support your distribution business model and size—today and tomorrow—is important. To

that end, look for a reputation for agility in accommodating new market needs. History is the

best predictor of the future, and vendors involved more than three decades ago in the early

development of “computerized” distribution systems will provide a more solid choice. That

philosophy must also continue today, delivering new solutions that streamline and automate

business operations and processes.

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About EpicorEpicor Software Corporation drives business growth. We provide flexible, industry-specific software that is designed around the needs

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deep understanding of your industry, Epicor solutions spur growth while managing complexity. The result is powerful solutions that

free your resources so you can grow your business. For more information, connect with Epicor or visit www.epicor.com.

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Replacement Expertise Delivers True Return on InvestmentReplacing your distribution software system involves a certain amount of innovation. Innovation

creates market leaders, and market leaders are the first to achieve a return on their investment—

usually a significant return. Look for a solution partner that is passionate about inspiring that

innovation in their customers, and knows how to manage the risk associated with it. You must

be convinced that the solution will help you achieve your objectives to keep your business lean

and competitive. Can they promise results and, more importantly, do they have a history of

getting results?

An excellent track record of client retention is proof that the unique needs of an extremely diverse

set of distributors are being satisfied. Skills and methodology must be applied to implement

quickly and successfully. Resources, financial strength, advanced technological infrastructure,

experienced and stable workforce, and hands-on management demonstrate a long-term ability

to serve your company into the future.

If done correctly, the work you put into selecting your new enterprise software system will pay

huge dividends, by giving your company a solution that increases sales, improves customer

service, and reduces operating costs. The results can be truly game-changing for any distributor.

5 mistakes distributors make when selecting an …...5 mistakes distributors make when selecting an...

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